Medtronic
(NYSE: MDT)
today reported second-quarter results that beat the Wall Street analysts’ consensus, with the world’s largest medtech company reporting strength across businesses and geographies.
Along with a raised full-year guidance, the news sent MDT shares up more than 4% to $78.74 apiece by afternoon trading today. MassDevice‘s MedTech 100 Index was up slightly.
The positive earnings came on the heels of some important regulatory approvals for Medtronic. Right before the weekend, the FDA approved the company’s Symplicity Spyral renal denervation system for treating hypertension — which company officials think could open up a multibillion-dollar market. Yesterday, the company received a CE mark for its PulseSelect pulsed field ablation system — another technology generating excitement.
In addition, the turnaround of Medtronic’s diabetes business continues seven months after it resolved an FDA warning letter and secured the agency’s approval of its MiniMed 780G infusion pump with Guardian 4 sensor. Just last month, the company launched its next-generation Simplera CGM-insulin pen combo in Europe after securing a CE mark. Diabetes business revenues, at $610 million, were up 9.7% year-over-year in Q2.
Medtronic earnings more than doubled in Q2
Fridley, Minnesota–based Medtronic earned $911 million, or 68¢ per share, off of $7.98 billion in revenue for the quarter ended Oct. 27, 2023. Profits more than doubled compared with the same quarter a year ago, and revenue was up 5.3% as reported and 5.0% organic.
Adjusted to exclude one-time items, Medtronic had an EPS of $1.25. The result was 7¢ ahead of The Street, where analysts expected EPS of $1.18 and revenue of $7.92 billion.
“We’re delivering a track record of durable, mid-single digit revenue growth. The underlying fundamentals are strong, and our solid results were broad-based across our businesses and geographies,” Medtronic CEO Geoff Martha said in a news release.
“We’re bringing game-changing innovation to market, with numerous recent regulatory approvals and major product launches, which give us confidence in our ability to continue delivering dependable growth.”
Medtronic has been streamlining operations — including engaging in layoffs. Medtronic, along with DaVita, completed a kidney care spinoff called Mozarc Medical in April. Work continues on the separation of Medtronic’s Patient Monitoring and Respiratory Interventions businesses.
Martha added during Medtronic’s earnings call that leadership is positioning the company to take advantage of its scale in areas of operations and supply chain core technology — and how it goes to market with large customers around the globe. “And as we go forward, our focus is on translating the durable revenue growth that we’ve established into durable earnings power.”
Martha also discussed the likely impact of GLP-1 weight loss drugs on Medtronic’s surgical and diabetes business. Read more about that at our sister publication Medical Design & Outsourcing.
‘Another step in the right direction’
The company increased its fiscal year 2023–24 organic revenue growth guidance to 4.75% versus the prior 4.5%. It also upped its adjusted EPS guidance to $5.13–5.19 from the previous $5.08–5.16 range.
Said CFO Karen Parkhill: “Based on the changes we’ve made to our operating model, incentives, and capital allocation, among other drivers, we’ve positioned the company to deliver consistent mid-single digit growth on the top line. As we move ahead, translating this durable revenue growth into durable earnings power remains a top priority.”
Truist analysts Richard Newitter, Samuel Brodovsky and Lin Zhang suggested that Medtronic didn’t have to do much to make investors feel better about MDT shares: “We believe investor expectations were very low into the print and that this result marks a ‘better than expected’ outcome relative to on those tempered expectations, which should lift the stock today in our view.”
Mike Matson at Needham & Co. kept his Hold rating on Medtronic stock but also called the Q2 earnings report “another step in the right direction.”
